In November 2015, the rail ministry, awarded a Rs 14,000-crore contract to General Electric to set up a diesel electric locomotive factory in Marhowra, Bihar. The bid for Madhepura factory for building modern electric locomotives, was awarded to the French company Alstom.
These two projects were showcase projects and huge investments of around Rs 40,000 crore over the next five years was expected for the two projects.
However, with the recent change in dispensation at the railways ministry, the focus has now shifted to a complete elimination of diesel locomotives and a promotion of electric engines. The govt. has therefore considering bringing the curtains down on the Marhowra plant as it wants to focus its resources in scaling up of electrification of the entire rail network.
Investment at the Marhowra factory was calculated at a little above Rs 2,000 crore. It was to manufacture at least 1,000 diesel locomotives over 10 years. This change of gear by the govt post award of a contract may cast a shadow on the investor sentiment, given the project's huge foreign direct investment component.
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New Delhi: General Electric's first diesel-electric locomotives arrived in India on Wednesday, kicking off the US conglomerate's $2.5 billion plan to supply 1,000 such engines.
"It is the first of 40 locomotives that has been imported to India from the U.S. The remaining 960 will be built at GE's Brilliant Factory, which is being constructed at Marhowra in Bihar, and will open in 2018," GE said in a statement on Wednesday.
The railways was debating the need to
purchase diesel-powered locomotives as it is turning to electric power to haul trains, but last month, GE had cautioned the Indian government of substantial cost that it would incur, besides hurting the future investment in the country, if it made changes to the joint venture it signed with the company in 2015.
The Indian government, which is looking to achieve 100% electrification of the railway network, has already offered GE to manufacture electric locomotives at their upcoming unit in Bihar. If the government pulls out of the joint venture, it will have to pay Rs 1,300 crore to the company. However, it has also estimated a saving of about Rs 8,000 crore per year on account of an all-electric rail network in the country.
"Through this project, we're creating a robust supply chain ecosystem in India, and will localize more than 70 percent of all content. We're proud of the more than 6,000 jobs, that have been created by GE in Bihar and Uttar Pradesh, and remain committed to our work in the country," said Vishal Wanchoo,president and CEO, GE South Asia.
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